Elements

The B2B Exemption to the Telemarketing Sales Rule

The Federal Trade Commission's Telemarketing Sale Rule (TSR) includes regulations to support both law enforcement and consumers. It provides the FTC and state attorneys general law-enforcement tools to combat telemarketing fraud; it gives consumers added privacy protections and defenses against unscrupulous telemarketers; and it helps consumers differentiate between fraudulent and legitimate telemarketing.

However, with some exceptions, most telephone calls between a telemarketer and a business are exempt from the TSR, and telemarketers often rely on the B2B exemption from applicable Do Not Call (DNC) registries and other telemarketing rules.

But there is a caveat.

How should telemarketers approach businesses vs. consumers?

Recent amendments to the TSR clarify that the B2B exemption to the TSR applies only to calls inducing a sale from a "business entity." Stated another way, telemarketing calls that solicit consumers at their place of business are not B2B solicitations and are not exempt from the TSR.

So, for example, a telemarketer who placed a call to a business line and solicits individual employees to purchase products or services for their own use or to make personal charitable contributions will not be considered exempt from TSR's requirements.

As you can see, it is dangerous to assume that every solicitation call made between a telemarketer and a business is automatically exempt from some or all of the TSR's provisions and applicable federal and state Do Not Call laws.

Telemarketers relying on the B2B exemption must ensure that they do not transition sales efforts to target the individual answering the call when the "business" states that it does not have a need for the product or service being sold.

When telemarketers attempt to sell to individuals any products that are suitable for either business or personal uses, they must comply with the National DNC Registry, satisfy disclosures requirements, abide by internal suppression lists, comply with calling time curfews and abandonment rates, and ensure that caller ID information is properly transmitted.

How do wireless rules fit with B2B calling?

Another common misconception is that B2B calls are exempt from complying with the Federal Communication Commission's wireless dialing rules when using an automatic telephone dialing system.

Calling a business wireless number using an automatic telephone dialing system without lawful "prior express written consent" is strictly forbidden. That a business owner has placed his number online or in a business directory is not tantamount to lawful consent to autodial.

Moreover, marketers may not be aware whether the telephone number being dialed is for a wireless number, a landline, or a business phone that doubles as a personal phone.

What else should businesses know?

In addition, many states have telemarketing rules that are significantly more stringent than federal law.

Although some B2B telemarketing calls are exempt from the national Do Not Call list law, not every state exempts B2B telemarketing calls under state law. In various jurisdictions, B2B telemarketers must also register and place a bond prior to calling to or from those states.

Interestingly, the TSR was also recently clarified in other respects:

Any recording made to memorialize a customer's or donor's express verifiable authorization is required to "clearly and conspicuously" state an accurate description of the goods, services, or charitable contribution prior to accepting payment. The seller and/or telemarketer bear the burden of proving that exemptions apply.

Do Not Call Registry fees cannot be shared among numerous sellers.

The types of unlawful burdens that interfere with a consumer's right to be added to an internal DNC list were clarified.

How can businesses protect themselves?

B2B telemarketing calls are subject to the same Telephone Consumer Protection Act wireless calling restrictions as B2B calls. Compliant telemarketing practices can be greatly enhanced by clearly separating campaigns associated with business consumers and individual consumers. B2B telemarketers would be prudent to scrub against national and state consumer Do Not Call lists given the risks inherent with mixed-use telephone lines.

These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

ABOUT THE AUTHOR

Richard B. Newman is an Internet-marketing compliance and regulatory defense attorney at Hinch Newman LLP, where he focuses on advertising and digital media matters.